School budgets in England will not now rise in real terms over the next four years, the government admitted today.

The chancellor, George Osborne, announced a 0.1% real-terms rise for schools in October's spending review. Surprised commentators said this was "his rabbit out of a hat".

But it appears there will not be a real rise – that is, a rise above inflation – in school budgets because of changes to the official inflation forecast.

This means that funds given to schools for pupils whose parents are on less than a joint income of £16,000 a year will not, in real terms, be extra money. This funding, known as the pupil premium, will be worth £430 per pupil.

Russell Hobby, the general secretary of the National Association of Head Teachers, said the sum was a "damp squib".

"Primary schools are going to really struggle to show any impact," he said.

The Department for Education said spending totals were based on the best forecast of inflation at the time and were subject to change.

The pupil premium is considered to be one of the most significant concessions won by the Liberal Democrats in the coalition agreement, and will be worth £2.5bn by 2014-15. Some 1.4 million children will receive it from next year.

Schools can choose how they spend the money, but most are likely to use it for one-to-one tuition for struggling pupils.